Health insurance premiums: The outlook for 2021

Filed Under: Costs

BY MOLLY TAFT and JEANNE PINDER

New York health insurers asked for an average of nearly 12 percent in rate increases on individual plans for 2021, figures posted to the state website on Friday show. Of the 13 state insurers, only two are proposing rate decreases, while Oscar, a Manhattan-based company, asked for a 19 percent rate increase – the highest ask this year.

Fidelis Care, one of the most widely available and lower-cost options in the state, had the second-highest ask at 18.8 percent. The company said it “made a preliminary adjustment to reflect the increased risk and uncertainty associated with the pandemic and its secondary effects.”

On the corporate market, Oscar again had the highest rate request at 29 percent, followed by Emblem at almost 21 percent.

Insurers usually ask for higher rates each year, even without unprecedented pandemics; last year, insurers requested an average of a 9 percent rate increase. Covid-19 is raising the costs of healthcare in New York State, health insurers say. But some speculate that the full cost of the pandemic will actually be reflected in the rate increases in 2022. 

“Plans really didn’t have a lot of information on what their COVID-related costs are just yet,” Leslie Moran, vice president of the state Health Plan Association, which represents health care insurance providers, told the Albany Times-Union.

LESS SPENDING ON NON-COVID CARE

What’s more, people are delaying getting primary or needed care due to the pandemic – putting off regular exams, elective surgeries, or well-visit checkups. This could lead to an additional spike in costs into next year, experts say.

In fact, so many people have been delaying procedures that insurers are seeing lower spending since the pandemic began. Last week, provider Anthem said it would offer some members a discount on their premiums for some of its members.

Rate increase requests are just that — regulators in the different states have differing rate review processes. In New York, the state Department of Financial Services will take the summer to review the requests and announce the official rate changes in August. Generally, the state does not approve the full increases from insurers – last year, for instance, it cut requests from an average of more than 9 percent to around 6 percent. 

Open enrollment for 2021 runs in most states from November 1 to December 15. This timeline differs state by state. Here’s a Centers for Medicare and Medicaid Services checklist, 

The rate setting process is taking place at a time of tumultuous change for health care. Telemedicine visits are on the rise as people avoid visiting the doctor. Delayed care may well mean that small problems will become bigger.

Hospitals too are in a complicated place. Losing the revenue from their lucrative elective procedures like hip replacements has led experts to predict that they and other providers will raise their rates next year to make up for lost revenue. In many parts of the country where the pandemic has not exploded, hospitals, clinics, labs and primary care providers are laying workers off and imposing furloughs.  

REBATES EXPECTED IN THE FALL

Also, experts expect the fall to see the largest medical loss ratio rebates yet from the insurers.The medical loss ratio was a feature of the Affordable Care Act that was designed to make sure that insurers spent most of the premiums they collect on care, limiting the insurers’ ability to spend on non-care-related things.

“Health insurers collect premiums from policyholders and use these funds to pay for enrollees’ health care claims, as well as administer coverage, market products, and earn profits for investors,” The Kaiser Family Foundation wrote in describing the MLR. “The Medical Loss Ratio provision of the ACA requires most insurance companies that cover individuals and small businesses to spend at least 80% of their premium income on health care claims and quality improvement, leaving the remaining 20% for administration, marketing, and profit. The MLR threshold is higher for large group plans, which must spend at least 85 percent of premium dollars on health care and quality improvement.”

In the fall of every year, insurers are obligated to issue rebates if they have underspent, either in the form of premium credits or check payments. Because insurance companies are paying out so little for care this year, experts anticipate that they will have to rebate substantial amounts of money. Read more about the medical loss ratio here and here.

INSURERS AND THEIR BOTTOM LINES

While insurers generally have been apprehensive about the effects of the pandemic on their bottom lines, it is far from clear that they have suffered greatly.

On June 4, Modern Healthcare reported: “Anthem said it would provide a one-month premium “credit” ranging from 10% to 15% to members enrolled in certain individual plans and to fully insured employer customers in July. Individuals in stand-alone and group dental plans would also receive a 50% credit, Anthem said.

“The insurer said it would also extend cost-sharing waivers for COVID-19 treatment through the end of the year for some plans and provide funding to support providers’ telehealth capabilities and use of personal protective gear.” The move was linked to a drop in spending by Anthem on routine care and elective procedures during the pandemic.

A few days later, on June 9, Anthem affirmed its earnings outlook for the year, according to Beckers Hospital Review. “Anthem reaffirmed its profit guidance for 2020 as the insurer expects continued financial growth despite the COVID-19 pandemic, according to a June 9 filing with the Securities and Exchange Commission,” Beckers wrote.